New lending criteria labelled unfair

Today's Fairfax Media-Ipsos poll shows most Kiwis believe a Reserve Bank crackdown on low deposit lending is unfair, with overwhelming agreement that young people are doing it tough, compared with baby boomers, when it comes to buying a first home.

Heaped on top of policies like student loans and the uncertainty surrounding future pension provision, housing is just the latest measure in which Generation Y is perceived as being worse off than the baby boomer generation.

It was the baby boomers who profited from free education and huge capital gains on their properties which, in many cases, have been ploughed back into investment housing to help cushion their retirement - a factor driving up property prices.

To rub salt into their wounds, those same baby boomers now enjoy one of the most generous pension schemes in the world - a scheme which the retirement commissioner and others have warned will not be sustainable by the time the younger generation retires.

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The poll of 1030 voters showed most people believe the younger generation is worse off than baby boomers - including baby boomers themselves.

Almost three-quarters of people surveyed (74.2 per cent) believe first homes are more unaffordable than in previous generations, just 25.1 per cent said there are more employment opportunities and 38.9 per cent said young people were better off in preparation for retirement.

The overwhelming majority (63.7 per cent) also believe the latest Reserve Bank restrictions are unfair to first home buyers and 37.2 per cent say it will help control house prices.

Yet, from young people, there's been barely a whimper.

The point has been raised before - young people are bearing the brunt of decisions made in the name of necessity, so why aren't they taking to the streets? More than that, many don't vote. Although eligible voters aged 18-24 represented 13 per cent of the total voting age population in the 2011 general election, they accounted for nearly half of the total who did not bother to enrol.

But rather than protest in the streets or suddenly flock to the ballot box, those 18 to 24-year-olds are, instead, likely to head overseas in search of better opportunities.

"I don't, for a second, think it's going to make them more politically active," said BNZ chief economist Tony Alexander, who studies the housing market.

"I think those maybe who are upset about the situation may well migrate, that's what we Kiwis tend to do when we find we're not happy with things around us."

Student politician Rory McCourt agreed, saying more students were graduating with the intention of going overseas.

It was "incredibly hard" for young people in the workplace and those leaving were doing so "without a huge intention to return and that is because of the disparity, it's because of house prices, it's because of rent prices".

While students were aware there was "huge intergenerational inequity", they were too busy trying to rush through expensive degrees to do anything about it.

"It's a pretty expensive exercise and that's why we're seeing less young people in particular engaged with politics and political activity because they simply don't have the time to get involved with these issues."

There was also a defeatist attitude and a lack of faith in any government to do anything to help, McCourt said.

"I think there are fewer guarantees and maybe this generation is accepting of that and saying it's a wild world out there and the state doesn't necessarily have the answers or the ability to secure things for us, like maybe the baby boomers could rely on."

Political commentator Bryce Edwards says young voters would be a massive problem for National at the next election if other parties could tap into the "stark" resentment suggested by the poll.

Whether they turned up to vote depended on whether there was a feeling of "resigned defeat among youth about these issues - we can't afford a house, we just accept that and we're not happy about it - or whether there's some degree of anger or some degree of feeling that a different party might improve that situation".

"It's not until a political party in opposition in particular comes along and politicises it and says ‘That's not good enough' that you actually get voters deciding to do something about it, whether it's protesting or participating in an election."

At this stage, young voters did

not seem convinced there was an alternative and Edwards argues their expectations have been lowered, meaning future push-back is unlikely.

"It's just a case of whether the Government is managing to lower the public's expectations and likewise if opposition parties act in a way that lowers people's expectations; then people don't tend to do much more than complain but then accept their lot."

New Zealand has a proud history of youth-led protest but Dr Marc Wilson, an associate professor in psychology at Victoria University, said economic concerns were not necessarily what got young people fizzed and motivated them to vote or to demand change.

They seemed more interested in advocating for social issues such as marriage equality "and I'm not sure that when young people protest, they're protesting about the right things".

"I mean, these are all important, some of the equality reforms in New Zealand allow us to lead the world but the downside is it comes at the expense of the economic equality."

Young people were also more open to change and more likely to vote for change if they did vote, making them a potential threat to incumbent governments and less of a priority to motivate.

Instead of being motivated to do something about house prices, it could actually be that many would move on from this old dream of home ownership, realising it was now more difficult and, in many cases, out of reach, he said.

"What will probably happen as a result is it will shift the way that young people think about home ownership so it will be less of a foundation stone of the way that they see themselves. I wouldn't be at all surprised if people ... start to downplay the importance of owning your own home as a marker of your adulthood."

Wilson echoed a sentiment expressed by many observers about the frustrations of the apathetic young voters, saying "if young people did sit up and pay attention, they could change the course of New Zealand's political history".

Past movements in New Zealand - anti-nuclear protests and those against Springboks rugby tours, for example - were largely youth-led and it's argued that those young voters tipped the balance in favour of Labour in the 2005 election after they promised interest-free student loans, dubbed the biggest election bribe in history.

The Fairfax Media-Ipsos poll also showed people saw a capital gains tax on investment properties, another suggested option for controlling house prices, as more fair to first home buyers than loan to value (LVR) restrictions and a better way to control rising house prices.

Successive governments have refused to impose the tax, however, which would hit baby boomers who own multiple homes, including many MPs.

The Government argues it would be effective only if also imposed on the family home - political suicide.

Edwards said there was an element of the baby boomers opening themselves up to charges of hypocrisy or "pulling up the ladder" through such policies which disproportionately affected young people. "When you look at politicians, there's quite a strong . . . contradiction of individual politicians benefiting from some of the policy settings that were around when they were younger and that they've removed some of those."

Of course, not everyone agrees young New Zealanders are now any worse off.

Financial author Martin Hawes said buying a house had always been hard while Dr Malcolm Menzies of the Retirement Commission said every generation dealt with its own difficulties, though he acknowledged younger people bore bigger financial burdens to get into less-affordable houses while student loans made it harder to start saving for retirement.

New Zealand's systems were generally good "but a little bit out of tune" and there was work being done to overcome things like high house prices, Menzies said.

Older New Zealanders were also particularly susceptible to any drop in house prices with many relying on that equity to fund their retirement.

Alexander added it was not necessarily the role of the government to smooth out intergenerational inequality or the ratio of incomes to house prices though it was an issue that governments needed to watch.

Each generation has faced its own struggles and young people were buying higher quality homes now than their predecessors.

Others suggest young people are not any less politically motivated but their methods are different.

They point to youth-led political movements such as Generation Zero and JustChange, who are targeting climate change and law and order respectively, and the way youth movements take on different forms today, largely social media-driven.

When it comes to economic issues such as housing, however, it seems there isn't great demand from young people for a better deal.

The survey of 1030 voters was taken between October 19 and 23 and had a margin of error of 3.1 per cent.